October 7520 Rate Increases to 1.2%

October 7520 Rate Increases to 1.2%

News story posted in Revenue Rulings on 25 September 2012| comments
audience: National Publication | last updated: 5 May 2013
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Summary

For purposes of determining the present value of an annuity, an interest for life or a term of years, or a remainder or a reversionary interest, Revenue Ruling 2012-28 indicates the applicable federal rate under section 7520 for October 2012 is 1.2%; up 0.2% from the September and August rates of 1.0%.

Rev. Rul. 2012-28; 2012-42 I.R.B. 1

Full Text:

Section 1274. -- Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property

(Also Sections 42, 280G, 382, 412, 467, 468, 482, 483, 642, 807, 846, 1288, 7520, 7872.)

This revenue ruling provides various prescribed rates for federal income tax purposes for October 2012 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in section 42(b)(1) for buildings placed in service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, and before December 31, 2013, shall not be less than 9%. Finally, Table 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520.

                       REV. RUL. 2012-28 TABLE 1
            Applicable Federal Rates (AFR) for October 2012
 _____________________________________________________________________

                                   Period for Compounding
                         _____________________________________________

                         Annual    Semiannual   Quarterly   Monthly
 _____________________________________________________________________

                                 Short-term

      AFR                 .23%        .23%        .23%        .23%
      110% AFR            .25%        .25%        .25%        .25%
      120% AFR            .28%        .28%        .28%        .28%
      130% AFR            .30%        .30%        .30%        .30%

                                  Mid-term

      AFR                 .93%        .93%        .93%        .93%
      110% AFR           1.02%       1.02%       1.02%       1.02%
      120% AFR           1.12%       1.12%       1.12%       1.12%
      130% AFR           1.21%       1.21%       1.21%       1.21%
      150% AFR           1.40%       1.40%       1.40%       1.40%
      175% AFR           1.64%       1.63%       1.63%       1.62%

                                 Long-term

      AFR                2.36%       2.35%       2.34%       2.34%
      110% AFR           2.61%       2.59%       2.58%       2.58%
      120% AFR           2.84%       2.82%       2.81%       2.80%
      130% AFR           3.08%       3.06%       3.05%       3.04%

                       REV. RUL. 2012-28 TABLE 2
                     Adjusted AFR for October 2012
 _____________________________________________________________________

                                    Period for Compounding
                        ______________________________________________

                         Annual   Semiannual   Quarterly    Monthly
 _____________________________________________________________________

      Short-term
      adjusted AFR        .23%        .23%        .23%        .23%

      Mid-term
      adjusted AFR       1.04%       1.04%       1.04%       1.04%

      Long-term
      adjusted AFR       2.87%       2.85%       2.84%       2.83%

                       REV. RUL. 2012-28 TABLE 3
                Rates Under Section 382 for October 2012
 _____________________________________________________________________

      Adjusted federal long-term rate for the current
      month                                                  2.87%

      Long-term tax-exempt rate for ownership changes
      during the current month (the highest of the
      adjusted federal long-term rates for the current
      month and the prior two months.)                       3.01%

                       REV. RUL. 2012-28 TABLE 4
    Appropriate Percentages Under Section 42(b)(1) for October 2012
 _____________________________________________________________________

      Note:  Under Section 42(b)(2), the applicable percentage for
      non-federally subsidized new buildings placed in service after
      July 30, 2008, and before December 31, 2013, shall not be less
      than 9%.

      Appropriate percentage for the 70% present value
      low-income housing credit                              7.38%

      Appropriate percentage for the 30% present value
      low-income housing credit                              3.16%

                      REV. RUL. 2012-28  TABLE 5
               Rate Under Section 7520 for October 2012
 _____________________________________________________________________

      Applicable federal rate for determining the present
      value of an annuity, an interest for life or a term
      of years, or a remainder or reversionary interest      1.2%

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